Bumper £8.5m payday for HSBC boss - for only five months work

A fat cat row has erupted after it emerged that a boss at HSBC collected more than £5.3 million for just five months' work.

The size of the windfall for Sir John Bond, the bank's former chairman, provoked fury among consumers.

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For HSBC, together with the rest of the big banks, is in the dock amid allegations of ripping off customers through illegal penalty charges and rigged interest rates. Sir John, aged 66, has described himself in the past as "just an ordinary bloke who has been very lucky". HSBC figures show he received a salary of £602,000 and bonuses of £1.458 million for the January to May period. This was boosted by some £6.6 million in share awards, half of which related to his service in 2006 and half for 2005. Sir John, who was with the bank for 45 years, also amassed a vast pension pot of £11.4 million which generates an income of £494,000 a year. If that were not enough, he has walked into another top job as chairman of the mobile phone giant, Vodafone, which pays another £475,000. The huge payments are remarkable, particularly when set against a relatively disappointing five per cent increase in the bank's profits for 2006. The increase was modest compared to Britain's other big banks, however the final profits total was still a mammoth £12 billion. The bank's profits would have been higher but for massive bad debts of some £5.7 billion, which were largely generated from failures in its home loan business in the United States. In February HSBC dismissed two senior executives in its US arm, but not before the men had collected bonuses of more than £20 million. The notion of rewards for failure have brought City institutions into disrepute both with shareholders and customers. They are particularly controversial given an explosion of customer fury over current account penalty charges and a poor deals on interest rates. The Office of Fair Trading has ruled that bank penalty charges for bouncing payments of up to £35 a time are both unfair and illegal. As a result, HSBC, together with other banks, is currently receiving thousands of refund claims from angry customers who have been overcharged in the past. Evidence has also emerged that HSBC and others have taken advantage of recent increases in the Bank of England base rate to boost their profit margins. HSBC has lifted its mortgage rate by 1.76 points to 6.25per cent over the last three years, however the rates paid to savers have gone up by only 0.66 per cent. This means the bank has increased its profit margin by 1.1 per cent, according to analysts Moneyfacts. The HSBC figures mean the total profits amassed by Britain's biggest banks for 2006 topped a record £40 billion for the first time. Eddy Weatherill, of the Independent Banking Advisory Services, said: "The banks are a licence to print money and it is clear that rule extends right the way through to the directors and executives. "Payments running into millions of pounds for just a few months work will stick in the throat of customers who have been unfairly treated. "By any measure, the banks's top executives are picking up huge rewards for failure, the failure to offer customers fair charges and good value financial products." The Lib-Dem shadow chancellor, Vincent Cable MP, complained: "Big pay days for a few directors sadly still means customers are being hit by excessive charges. "Bank profits are being boosted not only by unfair and in some cases illegal charges but also by giving customers a raw deal on interest rates. "It is simply unacceptable that banks are treating customers in this fashion and I urge customers to complain if they believe they are being cheated." The finance union Amicus complained the pay rise for ordinary HSBC staff has been pegged below inflation. Union official, John Nolan, said: "It is outrageous that an organisation which reports these profits insists on a below inflation pay rise."

The multi-millionaire, Sir John Bond, who is originally from Bristol, is described in profiles as "thoroughly modest and unassuming". Among his guiding philosophies is said to be the Chinese proverb: "Today, you're a rooster, tomorrow you're a feather duster". Critics will argue that £5.3 million buys quite a few feather dusters. An HSBC spokesman said: "Look at the growth of the company since Sir John became chairman in 1998 to 2006 when he retired. "We are substantially larger company and a substantially more profitable company."

HSBC is in the vanguard of controversial moves to introduce fees on current accounts in this country, so killing so-called free banking.

Executives at the bank have described the introduction of charging, on the model that exists in North America, Europe and Australia, as "inevitable".

The bank's telephone and internet subsidiary, First Direct, became the first mainstream bank to force charges on up to 200,000 customers last year. First Direct is charging £10 a month, while other finance giants are expected to follow suit.

On Monday the bank's chief executive, Michael Geoghegan, refused to rule out extending such charges.

He said: "We offer free banking today and we will offer it tomorrow, but I am not making a commitment for time immemorial. We will have to see how the market develops over time."